Readers' comments

Hi,
“Lesser expectations. The dream decade for emerging markets may be over”. Wanting not to be good, but great has resulted in being neither. The debtophobia combined with the cooling down of overheated economies has resulted in the productive capacity out pacing growing aggregate demand. What the IMF pointed out this week is like a blind man saying, I see. Could be because the bad climate of doing their job in the IMF?

First, GDP is an outdated statistic. We need to take into account environmental damage, long-term sustainability, and population dynamics like happiness. A more accurate statistic for economic performance is called for.

Second, indefinite exponential growth is unsustainable. It's been written plenty of times that even growing at 1% a year is unsustainable, undesirable and unhealthy. This concept of constant growth must be curbed from our mainstream corporate and governance mentality. Frankly, it's dangerous and self-destructive.

To me, this seems more like a balancing of the world economy. The US and Europe were growing mostly on consumption while the BRIC nations were growing on exports (generally speaking.). As the world blances, Western Nations will save more and decrease their debts. The BRIC nations will spend more and probably increase their debts. As a result, everything balances out. BRIC nations will obviously slow down their growth as their economies get larger and larger. It is harder to grow a 5 trillion dollar economy than it is to grow a 2 trillion dollar economy with 1.4 billion people in that economy. In the same light, it is harder to grow a 15 trillion dollar economy when the people are saving to pay down debts.

Even though advanced conuntries such as the US and the current economy-troubled countries in Europe have been suffering from a huge amount of debts, they are still leaning on the strategies like a leveraging or quantative easing that could cause more financial burdens to the economies, which means that they have enjoyed vanity fair based on the influxes from the emerging markets.

Any country can grow, but this growth does not necessarily mean creation of jobs.
For example if a growing economy needs more than 3% rate to create employ (both public and private) and this economy grow 2.5% this will not result in job creation, and we know that most world economies (including China, India or Brazil ) have a high dependence on domestic consumption.
It is also true that emerging economies usually need lower rates of growth to create jobs (as many of these jobs are low-profile jobs).
The European situation affects the worldwide economy, also to countries like China (lower demand for products manufactured in the country), creating less employ and therefore slowing more the growth in the country.
Therefore the problem is not grow less, the problem is growing at a sufficient rate to create new jobs that feed back national economy.

You miss the point. China is growing at 7.6 percent and that is a serious decrease from double digit growth. A hard landing is not defined by a recession; it is defined by a serious decline in growth. A fast decline could easily continue if it isn't controlled. In this way, the US is actually doing better than China.

The longer it takes the eurozone to sort out the sovereign debt crises, the more tapering of growth there will be in that graph. Ditto for the US cliff-hanger later this year. In any even, the US will likely pull ahead of the EU in absolute GDP terms in the near future, before it is finally exceeded by China.

Who cares about BRICs? Who cares about the GDP? Who cares about the growth rate? Definitely not the call center woman in Bangalore, not the miner in Carajás, not the gas worker in Sakhalin and neither does the factory worker in Shenzhen. I am sure not even 0.1% people in India or China know what BRIC is and obviously it does not mean anything to them. It’s just a silly term created by a creative economist at GS, who has excelled at the art of speculation. In the end every individual in each of these countries wants to maximize their wealth, and this is bound to happen by hook or crook. Whether it is through sluggish democracy, state controlled capitalism, petro-authoritarianism or crony capitalism. Irrespective of the fluctuations in the growth rate, one truth remains- with the awakening of India and China, 2 billion people were brought in to the mainstream, the competition in this world increased manifold. Do you even know how these countries’ economies were 50 years ago? The only things Indians and Chinese traded was Opium and Silk, etc., that too through the British. Look at them now; look at their trade with the rest of the world.
However what is really uncertain is what is going to happen to EU after the euro crisis? What is going to the US after the fiscal cliff? Will they be able to fit in to the new world order? Can they take prosperity for granted?

China’s GDP slowdown should not be too alarming, for at least four reasons IMO.

1. Export/ Import:

Sure, demands from EU and the US are both down in growth rate, and the US has just replaced EU as the largest importer of Chinese goods exported. Adding to the "woe" is a nation wide labor cost increase. But that's also the opportunity o restructure its product value content. China has also been diversifying and it is already the largest trading partner to ASEAN, Africa, Japan, Brazil, S. Korea and quite a few other major economies.

The proliferation of exim market places around the globe, plus that China has achieved record food crop production for the ninth straight year into 2012, should help to stabilize the world economy and be beneficial to many when the economy of super power EU and the US are sputtering. For the first 6 months of 2012, Chinese foreign trades reached $1.84 trillion, an 8% increase from 2011, even though the outlook this year is tough.

2. Managed housing industry slow-down:

A major component of economy's growth engine was the housing industry that typically contributed a few percentage points to China's GDP growth. But since last year the government has deliberately put a crimp to its growth for fear of real estate bubble and runaway inflation predicted by some experts. The GDP growth this year is taking a hit accordingly purposely.

3. With continued infrastructural investment, some increases of domestic consumption and FDI taking up the slack, the first 6 months GDP growth in 2012 achieved 7.8% growth despite of the slow-down of housing industry. (The 7.6% growth cited by this article is for Q2, 2012.) Overall China has added 12.2 million jobs in 2011, with the CPI Inflation checked to within an acceptable 3- 4% and public debt ratio kept well withing the safety limit.

4. ....Poverty eradication

For sooner poverty eradication, Chinese government has deliberately increased its population living under poverty from some 28 million to 128 million of persons in 2011 by raising the threshold of having disposable income of RMB 2,300 or less per person. (The US has 46 million people fell below the poverty line, defined as $22,314 for a family of four.) People are motivated to work.

It appears that China will be able to maintain a sustainable GDP growth of about 8% annually for more years to come. And that should be helpful to the recovery of EU and US economy which should help revive the world economy downstream, peacefully, without having the need to start a war or two by any paty, IMO.

'China’s GDP slowdown should not be too alarming'
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china's GDP slowdown may be not alarming to the chinese, but it sure has a lot of other people alarmed----with some taking pain to really worry about its economic impact to them, and some taking joy at china's slowdown or misfortune whatever.

The 'BRIC Nations' will be reduced to its essential players:
-Brazil was riding a commodities boom. Poverty, poor education and corruption rival Africa in challenges. Now it is out. => RICs

-Russia is an oil-rich Sheikdom that just happens to speak a Slavic language, practice Orthodox Christianity and drink vodka. And the oil output is dramatically declining. => ICs.

-India cannot overcome its poverty, lack of infrastructure and simply providing clean drinking water or a clean toilet. The demographic dividend and youth bulge threatens to be a demographic time bomb of unemployment, unfulfilled expectations, and youth protests. It is out. => C.

How close national economies are integrated with China like South Korea, Germany, Australia, Canada, Taiwan, Singapore, Panama, Chile, and the African continent determines their future prosperity. Whether advanced nations or developing countries, the fast growing nations are linked with China. The essence of the Globalization is China-nization.

The other BRIC nations prospered by supplying China's factories with commodities: ore, metals, logs and oil. And Germany, Switzerland and Austria, thrive because of providing those factories with technology, machinery and tools.

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'BRICs' was a trendy term once. It served its purpose to define a short span of modern history and early globalization. But now BRICs are an antique term. It was initially coined by a Goldman Sachs executive in 2001. Now we know Goldman Sachs are corporate villains that manipulate clients, markets and financial systems. Investment in Russia, India, and Brazil looks increasingly weak and risky. Use 'BRICs' to build a mossy, distressed garden wall.

Long term stability is to compliment and integrate with the Chinese economy. Forget the BRICs.

On the back of your easy-arm-chair-logic, the swiftness and nonchalance with which you dismiss the hopes, aspirations and abilities of billions of people is incredible.
Almost reminiscent of the simple minded sureness, which at its time similarly discarded basic human respect and dignity and drove slavery, imperialism and neo-imperialism.
You may choose to forget BRICs, but they won't cease to exist.

China is still growing at over 7%, India at over 6%. Considering the two biggest economic zones, North America and Europe, are flat I think it is a little too early to doubt the future growth of the emerging powers.
Lets not forget China and India together produce the largest share globally of human capital (especially MBAs and Engineers) both have high savings rates and continued foreign investment.

No, thats not true. standards of living/quality life should also be accounted. if growth comes at the expense of health and environment, then future generation will spend most of the money on clean air/water/health, which nature does it for free.

GDP growth may mean that future gen will have more money, but if they lose intangible assets such as health and environment growth will mean nothing.

Most emerging economies have a large class of people who do not have enough money for basic necessities, including medicine and healthy diets. Until those people get pulled out of poverty, the intangibles like the environment means little. The only way those people are going to be able to be pulled out of poverty is if their country becomes wealthier and thus GDP increases.

After a society eradicates poverty it is in a good position to start weighing continued economic growth versus intangibles. Russia is already in that position, but China, Brazil, and especially India still have a ways to go.

And up to a certain point there is a direct correlation between GDP per capita and life expectancy. It does not matter if the air is getting dirtier if more and more people gain access to health care.

Mexico is number 11 in the list of countries per GDP. If we want to populate the graph more, Mexico would appear. All displayed countries are part of the so-called BRIC nations, and are part of the top 10 economies.

I live in Colombia. The decline in oil, coffee and coal prices has moderately hit the Colombia Economy.

Inflation is controlled at 3,75% in 2011, and probably the same figure in 2012.
Growth in the 2011 reached 5.7% but probably will decrease to about 4.7%-5.2% in 2012.
Fortunately the Colombian central bank can still lower down interest rates ( currently at 5.25%)
Also total government debt is at about 40% of GDP.

In latin America, brasil has had the steepest decline in GDP. Followed by Venezuela an Argentina( argentina has a huge inflation of about 30%)

It appears that there is still Net GDP growth expected in Colombia which is not a bad base to work from. So long there is real GDP growth (in excess of inflation) and exceeds the population growth, the country is becoming better off.

you are right, Colombia is the perfect example, slow growth wont be catastrophe, Colombia before 2030 will be a rich country wit gdp per capita avobe US 20.000, maybe never will be in the top league of the richest countries of the world, but slower growth won´t thrash the slow revolution of this country and other emerging market who are doing things right, is similar for Chile, Peru, Poland, Botswana, Malaysia, Ghana, Vietnam Etc.